The week in energy: Saudi Arabia seeks investment, Opec goes flat out and New York sues Exxon

As a succession of international business and political leaders withdrew from Saudi Arabia’s Future Investment Initiative conference over the death of US-resident journalist Jamal Khashoggi, there was speculation that the event would be cancelled. It went ahead this week nevertheless, although Financial Times reporters at the conference described the mood as “sombre”, and most of those attending were from Saudi Arabia and other Gulf countries.

There was some unsettling entertainment, too: the FT’s Anjli Raval reported that a member of the Gipsy Kings sang “Hotel California”, with its famous line “You can check out any time you like, but you can never leave”. As the conference was held in the Riyadh Ritz-Carlton Hotel, where last year scores of Saudi businessmen and princes were detained in an anti-corruption purge, it seemed like an unfortunately pointed choice. Although Khashoggi’s death overshadowed the event, there were signs of the enduring influence conferred by Saudi Arabia’s oil wealth.

Despite the absence of most of the top executives from international banks and investment companies who had planned to attend, there were reportedly still plenty of lower-level bankers working to build relationships and plan for future deals. There were even some announcements of investment agreements, some new, some old, with a total value put at $55bn. They were largely in oil and related industries, however, so they will not do much to diversify the kingdom’s economy. Saudi Aramco accounted for the majority of the agreements: it signed memorandums of understanding said to be worth a total of $34bn, with companies including Total of France and the oilfield services groups Schlumberger, Halliburton and Baker Hughes, a General Electric company.

The Saudi leadership’s broader strategy of diversification through partnerships with foreign investors and joint projects inside the country has suffered “ a huge setback”, said Karen Young of the American Enterprise Institute. Earlier in the week Tass, the Russian news agency, published an interview with the Saudi energy minister Khalid al-Falih. It is a long interview, running to almost 4,000 words, and well worth reading in full for its insight into Saudi thinking. The key line that was picked out by other news services was Mr Falih’s assurance that Saudi Arabia had “ no intention” of using an oil embargo against the west, as it did in 1973. (As discussed in Energy Source last week, such a move would be likely to be hugely damaging to Saudi Arabia itself, as well as to oil consumers.)

Mr Falih also said at the Riyadh conference that Opec and its allies were in “produce as much as you can mode”, to ensure that demand for oil would be met, and suggested that the kingdom was ready to boost not only its output, but also its spare capacity. Those comments helped to drive down oil prices, which were also unsettled by the turbulence in world stock markets. On Thursday Opec’s joint ministerial monitoring committee issued a warning about the risk of an oversupply of oil next year